A new study from Sacramento State questions the notion that
policies designed to control sprawl also increase housing prices.

Instead, researchers examining data on hundreds of urbanized areas in the United
States found that if an area’s population in its central locations increases
by 10 percent—which reduces the amount of sprawl—then the median
price of a home in that area falls by 2.7 percent.

In the Sacramento region the median resale price of a home rose to $394,450
in August. This finding means that if 10 percent more of the Sacramento region’s
population lived in Citrus Heights, Elk Grove, Folsom, Roseville or Sacramento—areas
the Census defines as the Sacramento region’s “central locations”—home
buyers in the county could be expected to pay about $10,000 less for a middle-priced
home.

“An often-used argument against reducing sprawl is that it will drive
up the cost of housing. Our findings show that smart growth policies designed
to control sprawl in and of themselves do not raise housing prices in a region,”
said Robert Wassmer, professor of public policy and administration at Sacramento
State, who conducted the research with then-student Michelle Baass as part of
her master’s thesis.

Wassmer and Baass, who now works for the California Legislative Analyst’s
Office, found that housing prices can be expected to fall in an urban area that
is reducing sprawl because homeowners are more likely to choose smaller homes
on smaller lots. They also found that growth controls constrain the ability
of urban dwellers to build larger homes on large lots at the fringe of an urban
area, keeping prices down.

Their research, which will appear in a forthcoming issue of the Journal
of Policy Analysis and Management, is believed to be one of the first studies
to document this relationship between smart growth policies and housing prices.

The issue of planning for future growth has sparked fierce debate across the
country. “Sprawl affects the way we live,” said Wassmer, who has
done extensive research on the causes and consequences of urban sprawl in the
United States. “Sprawl has been blamed for traffic congestion, air pollution,
loss of open space, and economic, racial and ethnic segregation. But sprawl
also enables people to buy the bigger homes they often desire in the suburban
places they view as far away from the problems of the central locations.”

Many communities are adopting smart growth policies designed to limit future
sprawl. For example, the Sacramento Area Council of Governments last year adopted
what is called the Preferred Blueprint Scenario, a land-use and transportation
planning document to centralize growth over the next 50 years.

Wassmer and Baass examined 2000 U.S. Census data from 452 urbanized areas across
the country to determine how the degree of population centralization influences
housing prices. “Our evidence shows that greater centralization in an
urban area results in a reduced proportion of upper-priced homes in that urban
area and a lower median-priced house for the entire area,” Wassmer said.

But Wassmer also added that more research on the issue is needed before he can
say with certainty that cutting sprawl is always the most appropriate policy
course. “Nevertheless, our research casts doubt on one commonly cited
cost of efforts to reduce sprawl in urban America: that such a public policy
necessarily raises urban housing prices,” Wassmer said.

Wassmer can be reached at (916) 278-6304 or rwassme@csus.edu.
A copy of the complete study “Does a More Centralized Urban Form Raise
Housing Prices?” is available at www.csus.edu/indiv/w/wassmerr.
Media assistance is available from Sacramento State public affairs office at
(916) 278-6156.